ETHTaipei 2024 | Exploring Re-Staking: LRT Current Landscape and Future Development Trends

At the first forum on restaking at ETHTaipei 2024, Tagus Labs, a crypto venture focusing on liquidity staking derivatives in the LSD field, CEO Filipe discussed the changes and opportunities brought by EigenLayer, and engaged in discussions with other project teams on the future vision of restaking projects.

What Changes Does EigenLayer Bring

Introduction to EigenLayer

Filipe believes EigenLayer's value lies in two main aspects:

• A decentralized trust trading market
• Assisting projects that need to build consensus networks, such as AVS, to reduce the cold start threshold

With these two core aspects, EigenLayer can bring Ethereum's trust foundation to other decentralized ecosystems, benefiting middleware, Layer2, and cross-chain bridges. The leverage of trust can enhance resource utilization efficiency.

EigenLayer allows middleware to skip the cold start phase, reducing the time needed to accumulate consensus over three years and lowering the difficulty of starting projects.

Potential Future Applications of EigenLayer

Any product that needs a decentralized node structure theoretically can become a customer of EigenLayer. Filipe points out that the following projects could potentially be future applications of EigenLayer:

Decentralized sorters, data availability layers, fast finality layers, keeper networks, reorder resistance, cross-chain bridges, threshold cryptography, fully homomorphic encryption, relay networks, prover networks, risk simulation computation networks, and MEV management.

Trends in Staking in the Future

What Are Staking Projects

After discussing EigenLayer, Filipe moves on to the topic of staking tokens LRT. Staking projects are built on top of EigenLayer, allowing users to secure the AVS network with their ETH while releasing liquidity again, increasing the flexibility of users' staked funds and maintaining the composability of DeFi.

Recommended reading: Explaining the opportunities and risks of the liquidity staking token LRT project in detail
Reason for recommendation: This article covers from LST to LRT, helping readers who are not familiar with the staking field to quickly review and list the types of existing related projects in detail.

However, besides the benefits, staking projects also come with corresponding risks. Filipe believes that the biggest risks are network penalty risks and protocol complexity risks.

Classification of Staking Projects

If LRT is in the form of staking tokens and protocol design, it can generally be divided into three types:

• Native LRTs: Native staking protocols. Only accept native ETH tokens, with relatively low risk and complexity, such as EigenPie.
• Isolated LRTs: Independent staking protocols. Accept liquidity staking tokens LST, user-friendly for stakers using protocols like Lido, such as Ether.fi.
• Basket-based LRTs: Basket staking protocols. Can accept native ETH tokens or liquidity staking tokens LST, with the highest protocol complexity and lowest transparency, such as Renzo.

Current Status and Future Development of Staking Ecosystem

By categorizing projects according to the above classification, users can better distinguish protocol risks.

In addition to existing Ethereum network protocols, Filipe looks to the potential staking market, pointing out that Layer2 networks, including Arbitrum, zkSync, Linea, and Rollups, are fertile ground. A large part of their TVL comes from ETH tokens, which currently lack staking rewards compared to assets on the Ethereum main network.

This is also the focus of Blast and Manta, providing users with staking channels to inject funds into Layer2 networks, allowing users to participate in the Layer2 ecosystem without losing staking and restaking rewards.

Details on Blur yield-type L2 network Blast: on-chain native interest rates, NFT perpetual contracts, etc.